What are the main differences between a monopolist and a perfectly competitive firm?
A monopolist is a price maker, while a competitive firm is a price taker. A competitive firm can therefore change its output level without any impact on market price, while a change in production by a monopolist implies a change in the price of the product. This is because, being the sole producer, the market demand curve is the demand curve the monopolist perceives. A competitive firm on the other hand perceives a demand curve horizontal at the market price.
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An increase in the number of workers hired by a firm could result from
A) a decrease in the marginal product of labor. B) a decrease in the marginal revenue product of labor. C) an increase in the real wage. D) a decrease in the real wage.
A bank seeks a 4% real return on its loans and predicts a 4% annual rate of inflation. It should therefore charge a nominal interest rate of
A) 0%. B) 1%. C) 4%. D) 8%. E) 12%.
This table represents the revenues faced by a monopolist.PriceQuantity SoldTotal RevenueAverage RevenueMarginal Revenue$1,0001$1,000 $9002$1,800 $8003$2,400 $7004$2,800 $6005$3,000 $5006$3,000 $4007$2,800 Using the information in the table shown, the average revenue for this firm:
A. increases as output increases. B. remains constant regardless of level of output. C. decreases as output increases. D. is maximized when total revenue is maximized.
The imposition of a unit excise tax on red wine will
A. lower equilibrium quantity and raise equilibrium price in the market. B. increase equilibrium quantity and price in the market. C. lower equilibrium price and quantity in the market. D. raise equilibrium quantity and lower equilibrium price in the market.